Gold Price Plunges as Fed Hawkishness and Higher Oil Prices Weaken Safe Haven Demand

Gold has reversed its upward trend after reaching $4,697 per ounce on August 25. The recent decline is due to several factors including changed Federal Reserve policy expectations, rising Treasury yields, a strengthened U.S. dollar, and higher oil prices.

The Federal Reserve's hawkish remarks by Chairman Kevin Warsh at Jackson Hole on August 28 indicated that more work is needed to contain inflation. This led to an increase in rate hike expectations, with a 25 basis point rate increase now seen as likely for the September 16 meeting.

Rising oil prices have also complicated gold's role as a safe-haven asset. The recent conflict involving the U.S. and Iran has pushed Brent crude oil above $95 per barrel, which can feed into inflation expectations and support higher interest rates.

The technical picture of gold is also bearish, with the metal dropping below an important support zone around $4,330. This puts pressure on the next major support level at $4,169, which could determine whether the broader structure remains intact.